Contact Info.

Thursday, January 9, 2014

Top Semiconductor Fab Capacity Converging

The concentration of the number of companies producing chips continue due to increasing cost of developing leading edge semiconductor manufacturing technology. The article below documents this evolution.

"there are only about 15 companies that comprise the entire future total available market (TAM) for leading-edge IC fabrication equipment and materials. When 450mm wafer fabrication technology comes into production, this manufacturer group is predicted to shrink even further to a maximum of just 10 companies."

The top 10 companies now hold 67% of worldwide IC
industry capacity, up from 54% in 2009.

A ranking of the industry’s 10 largest IC manufacturers in
terms of installed capacity is provided in Figure 1. Included in the list are
four from North America, two companies from South Korea, two from Taiwan, and
one each from Europe and Japan.

As of December 2013, Samsung had the most installed wafer
capacity with nearly 1.9 million 200mm-equivalent wafers per month! That represented
12.6% of the world’s total capacity and most of it used for the fabrication of
DRAM and flash memory devices. Next in line was the largest pure-play
foundry in the world TSMC with about 1.5 million wafers per month capacity, or
10.0% of total worldwide capacity. Following TSMC were memory IC
suppliers Micron, Toshiba/SanDisk, and SK Hynix.

In January 2013, Micron and Nanya amended their Inotera
partnership such that Micron now takes 95% of Inotera’s wafer output.
Previously, Micron and Nanya evenly split Inotera’s capacity. Then,
in July 2013, Micron finally closed the deal on its acquisition of Elpida
Memory and the Rexchip business in Taiwan that Elpida operated in partnership
with Powerchip. It took Micron a full year to complete the purchase after
several delays with getting approvals from bondholders and governments.
With the addition of the Elpida and Rexchip fabs as well as the extra
Inotera capacity, Micron became the third-largest wafer capacity holder in the
world in 2013 with nearly 1.4 million 200mm-equivalent wafers per month (9.3%
of total worldwide capacity). At the end of 2012, Micron had the
sixth-largest amount of wafer capacity.

The fourth-largest capacity holder at the end of 2013 was
Toshiba with a little under 1.2 million in monthly wafer capacity (8.0% of
total worldwide capacity), including a substantial amount of flash memory
capacity for joint-investor/partner SanDisk. After Toshiba came another
memory IC supplier SK Hynix with a little more than one million wafers/month
(7.0% of total worldwide capacity). Rounding out the top six companies
was Intel with 961K 200mm-equivalent wafers per month capacity, or 6.5% of
total worldwide capacity. Just two years ago in 2011, Intel was the
third-largest capacity leader, but in early 2012 the company reduced its
ownership position in IM Flash as well as its wafer output share from its joint
venture with Micron.

Figure 1

The three largest pure-play foundries—TSMC, GlobalFoundries,
and UMC—are ranked in the top 10 listing of capacity leaders. In total,
these three companies have held about 80% of the worldwide pure-play foundry
market since 2010. Moreover, these three foundries had a combined
capacity of about 2.5 million wafers per month as of December 2013,
representing about 17% of the total fab capacity in the world.

The combined capacity of the top-5 leaders accounted for 47%
of total worldwide capacity in Dec-2013. At the same time, just over
two-thirds (67%) of the world’s capacity was represented by the combined
capacity of the top-10 leaders, while the top 15 accounted for 76% and the top
25, 85%, of worldwide installed IC capacity in Dec-2013. It should be
noted that the shares of these groups have each increased significantly since
2009. The top-5 group gained 11 percentage points; the top-10 group, 13
points; the top-15 group, 12 points; and the top-25 group, seven points. Those
are big gains over the course of just four years!

IC manufacturing is increasingly becoming a high stakes
poker game with enormous up-front costs. Today, it costs $4.0-$5.0
billion for a high-volume state-of-the-art 300mm wafer fab and the cost to
build tomorrow’s 450mm wafer fab will probably be double that. Despite
the cost-per-unit area advantage that larger wafers provide, there are fewer
and fewer companies willing and able to continue
investing that kind of money.

IC Insights believes that the capacity shares of the top 5,
10, 15, and 25 leaders will continue to increase over the next several years as
the big get bigger, middle-tier manufacturers merge to consolidate resources
and improve competitiveness, and a greater number of mid- to small-size
companies move away from in-house IC fabrication and move toward using
third-party foundries.

Rankings of IC manufacturers by installed capacity for each
of the wafer sizes are shown in Figure 2. Looking at the ranking for
300mm wafer capacity, it is not surprising that the list includes only DRAM and
flash memory suppliers like Samsung, Toshiba, Micron, SK Hynix, and Nanya; the
industry’s biggest IC manufacturer and dominant MPU supplier Intel; and the
world’s three largest pure-play foundries TSMC, GlobalFoundries, and UMC.
These companies offer the types of ICs that benefit most from using the
largest wafer size available to best amortize the manufacturing cost per die.
The ranking for the smaller wafer sizes (i.e., ≤150mm) includes a more
diversified group of companies.

Figure 2

A significant trend with regard to the industry’s IC
manufacturing base, and a worrisome one from the perspective of companies that
supply equipment and materials to chip makers, is that as the industry moves IC
fabrication onto larger wafers in bigger fabs, the group of IC manufacturers
continues to shrink in number. There are just 36% the number of companies
that own and operate 300mm wafer fabs than 200mm fabs and the distribution of
worldwide 300mm wafer capacity among those manufacturers is very top-heavy.
Essentially, there are only about 15 companies that comprise the entire
future total available market (TAM) for leading-edge IC fabrication equipment
and materials. When 450mm wafer fabrication technology comes into
production, this manufacturer group is predicted to shrink even further to a
maximum of just 10 companies.